TRAVEL ADVISORY: CORRESPONDENT'S REPORT; Upstate New York May Get Air Fare Relief

FLYING between New York City and upstate New York, which can cost more than flying across the Atlantic, may get cheaper this fall, because investors in a proposed discount airline are working with a variety of elected officials to bring fares down. But there are formidable obstacles to the plan, and leisure travelers may not benefit nearly so much as last-minute travelers paying full coach fare.

High air fares are a hot business and political issue upstate, where Rochester has the fourth-highest air fares in the country, while Buffalo and Syracuse are among the 20 most expensive, according to Department of Transportation data.

In a recent search of air fares for tickets bought on short notice, it typically cost $384 to fly from Albany to La Guardia Airport and back the same day, or $1.39 a mile, while a same-day round trip from Albany to Miami on most lines cost $468, 19 cents a mile.

State Assembly Speaker Sheldon Silver, a Manhattan Democrat, said that a subcommittee of the Economic Development Committee will be named in a few weeks to look into the situation and that a staff member was already collecting economic data.

Mr. Silver's inquiry follows complaints by corporations upstate that they are being gouged by the airlines. Eastman Kodak recently relocated some sales people from Rochester to Atlanta to take advantage of lower fares and more frequent service.

Upstate business and political leaders say the city whose air fares has attracted their interest is Providence, R.I., where the arrival in 1996 of the biggest and strongest low-fare carrier, Southwest, sent all carriers' average fares plummeting.

Southwest has shown little interest in upstate New York. But a group of investors, including George Soros, filed last month to start a discount airline that would use Kennedy International Airport as a hub. David Neeleman, the entrepreneur who has raised $130 million to start the airline, said he had promised that Buffalo, Rochester or Syracuse would be the first city his airline served.

Mr. Neeleman's airline does not have a name yet. But after he picks one, the airline faces the daunting task of persuading travelers that its fares are low enough to make it worth traveling via Kennedy instead of La Guardia, which is closer to Manhattan. Mr. Neeleman says Kennedy has fewer flight delays, which would compensate for the longer and costlier taxi ride.

The proposed new airline has powerful allies. In Washington, Senators Daniel Patrick Moynihan and Charles E. Schumer, both Democrats, and four upstate Representatives have asked Transportation Secretary Rodney E. Slater to do whatever is necessary to insure low-cost air service for upstate cities.

Their Jan. 20 letter came three and a half months after a small low-cost carrier, Eastwind Airlines, gave up on Rochester after about two months of service to Boston, Trenton, Dulles Airport near Washington and Greensboro, N.C.

United and US Airways say their prices are fair and competitive. Richard Weintraub, a spokesman for US Airways, said upstate fares were high because most flights are under 300 miles and costs per mile fall as the length of flights increases. He said that the costs of operating 250-mile flights -- roughly the distance from Rochester to Philadelphia or Syracuse to Boston -- were about 25 percent more per mile than 300-mile flights and about twice as costly per mile as 1,000-mile flights.

US Airways and United call the Transportation Department air-fare data misleading because city pairs with mostly business travelers have higher average fares than those with mostly leisure travelers. ''Average fares appear high for Buffalo, Rochester and Syracuse because most passengers are on business fares,'' Mr. Weintraub said.

Representative Louise Slaughter, a Rochester Democrat who has been complaining that high fares are strangling business upstate, said: ''Fares in western New York are subsidizing fares in other parts of the country that have low-cost competition. Fares really aren't going to come down until we get competition.''

Tony Molinaro, a spokesman for United, denied that his airline used high fares out of upstate New York to subsidize fares elsewhere. But his remarks also lent support to the Congresswoman's point.

''We set prices according to a number of factors: supply and demand, population base in two cities, overhead costs such as landing fees, aircraft expenses, and competition is another big piece,'' he said. ''To know if fares are high or not I would have to know what the competition is.

''But to compare upstate New York to Chicago to, say, Salt Lake City to Denver or Albuquerque to Denver would not be reasonable because of competition in those markets from Southwest, America West and other carriers. But it is not like we are looking at the whole country and saying these are low prices here in Utah so let's jack them up here in New York.''